RETAIL NEWS

WBA takes 40% stake in China’s leading pharmacy chain

BY Michael Johnsen

Walgreens Boots Alliance on Wednesday extended its retail pharmacy acumen into China by taking a 40% stake in Sinopharm Holding GuoDa Drugstores in a deal worth approximately $416 million.

“We are very pleased to become a strategic investor in GuoDa,” stated Stefano Pessina, WBA executive vice chairman and CEO. “It is China’s leading pharmacy chain and we believe that we can positively contribute to its continued successful development with our global pharmacy expertise. We have had a presence in China for around 10 years, initially through Alliance Boots, and we are excited about the opportunity to further invest in the country’s fast growing retail pharmacy sector.”

GuoDa is a leading retail pharmacy chain in China, and has been pursuing its vision for expansion across the country in the context of the ongoing healthcare reforms and increasing importance of the pharmacy channel in the country. Deerfield, Ill.-based Walgreens Boots Alliance, as a global pharmacy-led enterprise, believes it is well positioned to provide its significant expertise to GuoDa and support its growth ambitions.

The transaction is subject to regulatory review and approval, and other customary closing conditions. Upon completion, Walgreens Boots Alliance would account for this stake as an equity method investment.

 

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Dollar General announces store growth plans, remodeling efforts

BY Marianne Wilson

The discounter will execute approximately 2,000 real estate projects in fiscal 2018. The emphasis will be on remodeling. Dollar General plans to open 900 new stores (compared to an estimated 1,285 new units in fiscal 2017), remodel 1,000 existing sites and relocate 100 stores (compared to 760 combined remodels and relocations this year).

“We continue to believe that investing in the business through our high-return new store growth is the best use of our capital to help drive long-term shareholder value,” said Todd Vasos, Dollar General’s CEO. “Our new store growth is complemented with a significant increase in our store remodel program from fiscal 2017 that we view as an investment to enhance and consistently deliver on our brand promise to help our customers save time and money every day.”

Neil Saunders, managing director of GlobalData Retail, commented that many of Dollar General’s new stores will be located in metro areas.

“This represents a slight shift in focus–but one that we believe presents Dollar General with a significant opportunity,” Saunders said. (For more, click here.)

Dollar General’s net income rose to $252.5 million, or 93 cents per share, from $235.3 million, or 84 cents per share, in the quarter ended November 3, over the year-ago period. Excluding items, the company earned 98 cents per share, beating the average analysts’ estimate of 94 cents.

Net sales increased 11% to $5.90 billion. Same-store sales rose 4.3%, which the company attributed to increases in average transaction amount and customer traffic. The company said hurricane-related sales contributed an estimated 30 to 35 basis points to same-store sales.

“During the quarter, we effectively balanced our same-store sales growth while achieving gross profit rate expansion and continuing our planned investments in the business,” said Vasos.

Dollar General narrowed its fiscal 2017 GAAP diluted earnings per share to $4.37 to $4.47, compared to its prior guidance range of $4.35 to $4.50. The current diluted earnings per share guidance range now includes the estimated net negative impact on the third quarter diluted earnings per share results of $0.05 related to the hurricanes.

For fiscal 2017, the company now forecasts net sales growth of approximately 7%, compared to its prior guidance range of 5% to 7% growth. It also forecasts same-store sales growth of approximately 2.5%, compared to its prior expectation that same-store sales would fall at the upper end of the range of slightly positive to up 2%.

Dollar General operated 14,321 stores in 44 states as of November 3, 2017.

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Walmart changes name amid growing emphasis on e-commerce

BY Marianne Wilson

The discounter on Wednesday announced that it is changing its legal name from Wal-Mart Stores to Walmart Inc., effective Feb. 1, 2018. The move reflects the chain’s growing emphasis on e-commerce and its positioning as a retailer with integrated online and offline operations.

“Our customers know us as Walmart and today they shop with us not only in our stores but online and with our app as well,” said Doug McMillon, Walmart president and CEO. “While our legal name is used in a limited number of places, we felt it was best to have a name that was consistent with the idea that you can shop us however you like as a customer.”

In a blog post on the company’s web site, McMillon said the change not only the company’s strategy to win the future of retail, but is also a bit about returning to the company’s roots.

You might be surprised to learn that, when Sam Walton opened the first store in 1962, the name on the front of the building was simply, “Walmart.” A few years later, we incorporated as Wal-Mart, Inc., and amended the name to Wal-Mart Stores, Inc., when we went public in 1970,” McMillon wrote.

Walmart operates under nearly 60 different banners around the world, including e-commerce sites, and has more than 11,600 stores and clubs in 28 countries. It will continue to trade on the NYSE as WMT.

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